Brazil market goes where people are

Hit beach for sun, sand and stocks

SANTOS, Brazil -- Where do you hunt for investors in a country that boasts more than 5,000 miles of pristine coastline? Try the beach.

That is precisely what Brazil's Bovespa, Latin America's mightiest stock market, is doing this summer.

For the past month, representatives from the bourse have been scouring Sao Paulo's most popular beaches in search of would-be investors in a colorful van dubbed the "Bov-mobile," a sort of billboard on wheels manned by Wall Street types in shorts and pretty women in skimpy summerwear.

The strategy is part of a larger push by the Sao Paulo stock exchange to spread the gospel of share ownership across Brazil by teaching the ins and outs of the market to everyone.

The goal, Bovespa's president Raymundo Magliano says, is to democratize the stock market in a country where just 2 percent of the population owns shares, compared with about half of all American adults.

Getting Brazilians to put their hard-earned money in the stock market is no easy task. Nearly a third of the population lives in poverty, and millions can barely make ends meet.

Local investors and some Brazilian blue chip companies have flocked to Wall Street, listing their shares in New York because a financial tax in Brazil made transaction costs in the United States much lower than in Brazil.

Successive financial crises have also taken their toll on the Bovespa. Five years ago, the Bovespa's average daily turnover was around $1 billion. Today, about $150 million changes hands on a given day at the bourse. While that's still better than most other Latin American markets, it's peanuts by U.S. or European standards.

But the Bovespa, and Magliano, aren't down for the count.

After nine months of intense lobbying, the Bovespa convinced lawmakers to pass a law last June exempting stock transactions from a crippling 0.38 percent financial tax levied on everything from cash withdrawals to personal checks.

Before that, legislators had passed a law strengthening minority shareholders' rights, and last February the Bovespa started a new bourse called the Novo Mercado, seeking to boost liquidity and provide smaller Brazilian companies with an alternative source of capital.

So far, though, only two companies have listed on the Novo Mercado. Most smaller firms have been scared away by an adverse global investment climate and high interest rates.

But the Novo Mercado's slow start hasn't discouraged Magliano, who is now taking what he proudly calls "people's capitalism" to the masses. And, of course, the "masses" in Brazil hang out at the beach.

In just over a month, tens of thousands of curious sunbathers have approached the Bovespa's own Baywatch crew to learn how to invest in shares, with hundreds deciding to take the plunge.

For many of the beachgoers, the stock market is a complete mystery, a surreal arena where a bunch of screaming men spend their days playing with other people's money.

"Most people that I talk to don't have the slightest idea of how the stock market works," said Paschoal Buonomo, a broker at Sao Paulo investment firm TOV. Buonomo recently spent a day wooing potential investors on Gonzaga beach in Santos.

"Some think it's a haven of sorts for dishonest speculators, but we're here to explain that there are many opportunities for the small investor to profit, too."